The Deterring Role of the Medium of Payment in Takeover Contests: Theory and Evidence from the UK

P. Cornu and Dusan Isakov

Working Papers from Ecole des Hautes Etudes Commerciales, Universite de Geneve-

Abstract: The deterring role of the medium of payment in a takeover contest is analyzed from the point of view of the bidder. Cash, debt and equity are considered as alternative mediums of payment, and the bidder equilibrium strategies are specified following the Perfect Bayesian Equilibrium requirements for a signaling game. The model predicts notably that cash offers signal a high-valuing bidder, strongly determined to acquire the target firm.

Keywords: TAKEOVERS; COMPETITION (search for similar items in EconPapers)
JEL-codes: C72 G34 (search for similar items in EconPapers)
Pages: 26 pages
Date: 1998
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Citations: View citations in EconPapers (3)

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Journal Article: The Deterring Role of the Medium of Payment in Takeover Contests: Theory and Evidence from the UK (2000)
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Persistent link: https://EconPapers.repec.org/RePEc:fth:ehecge:98.16

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